Irvine Housing Blog

Well, at least according to the WSJ, the government is going to eventually get its share of the HELOC default money:

http://online.wsj.com/article/SB10001424052748703686304575228783947789118.html?mod=dist_smartbrief

The difference b/w a 1% O-A & a 6% payment is $1500/mo.  18k/yr tax free = 24k bonus pre-tax.

Also, the tax value is $411k at Redfin.  I’ve harped on this a lot, but when someone takes out $625k in debt on a home, their tax value should rise to match that.  Not a huge difference, but it’s another 2k/yr.

Also, from Redfin, it seems like this house had a lost decade in the 90’s, declining in price from 1989 to 1999.  Mortgage rates were around 10% in ‘89, but 7% in ‘99.  Case-Shiller: LA shows this too.  How long till there’s a CSI(ndex) - LA/Miami/Las Vegas show on HGTV?

“The effect of these conditions is to create limited inventory for the lenders to sell their own properties at inflated prices.”

The banks don’t want to sell at a loss, it has nothing to do with “inflated prices”.  Prices are now 20-40% down from 5 years ago in most areas. 

The prices the banks are selling at are at fundamental DTI and rental parity except for some premium areas.  There are plenty of options for a young family at or below rental parity.  People should rejoice at this fact, rather than be miserable over the Irvine premium.

I encountered one of the REOs that wasn’t for sale this weekend.  At least two cancelled sales and a complex history.  It appears to have been rented back to the prior owner. 

In the part of Malibu where I am looking, more than half of the homes which have actually sold were REOs.  Homes in various stages of foreclosure outnumber listings. 

Of the homes where I lived as a renter, one foreclosed in the 1990s, right on schedule.  One was foreclosed in Dec 2009, after a cancelled sale and some maneuvering; not sure if the former owner is evicted yet.  One is now scheduled for auction after a wild case of refi and HELOC abuse.  One went through a normal sale at a profit.  One is sitting vacant, but not in foreclosure.

Oh, and one burned down in a wildfire.

If the shadow inventory was let loose, it would have a huge effect.

If a lender thinks prices will increase in the short term, it is in their best interest to delay foreclosing until that happens, since they can then get more money when they sell it.  That may be a reason for some of the delays.  Since currently interest rates and inflation are both near zero, waiting has less of an economic cost than if inflation and interest rates were at more typical levels.

Where are all those insiders who claim the banks aren’t holding properties on purpose? That it’s merely being overrun by the volume and not being able to service it.

What about the reports that say the big banks are going to let loose their foreclosures by the end of the year? Why would they do that if the slow trickle is working for them?

Should we really be wary of those ForeclosureRadar maps if those dots are basically meaningless since they don’t really indicate inventory that is going to hit market but rather the talent of banks being able to kick the can?

Today’s post is a bit conflicting for me. Last week we were told that all the foreclosures will bring the prices down to where they should be but this week’s post says that banks won’t let that happen. So basically… we are in another bubble?

I agree that most desirable communities seem to be in a second, smaller, bubble.
What is the general consensus about outlying communities? Could they be at or near a bottom?
We are looking at buying some land in the Castaic area.  Prices in Castaic have dropped much more (% wise) than in the more desirable communities of Valencia and Stevenson Ranch. I would still be waiting for those areas but Castaic seems to have dropped much more dramatically and I am thinking the time might be right.
What are your thoughts on outlying communities such as Castaic?

I was wondering with 8%+ loans over 90 days late in Orange County, why there are so few “notice of defaults”..  I always thought a loan over 90 days late would automatically become a “notice of default”.. Now I know there’s a few steps between being 90 days late and the home receiving a “notice of default”. Thanks for the info.

wow…I accidently visited the ‘other’ board today. They have a discussion about irvine prices and refer to IHB. Now I am more confused than ever, should have purchased last year. Why is it that just a few are willing to see the new bubble being created in Irvine…maybe it is not a bubble anymore, just the new reality.

At what point is it reasonable for crowds of angry mobs to start evicting these f’in’ squatters ourselves?

I stumbled upon this article today (linked through patrick) but I don’t know how much credibility it has because it smells of conspiracy theorist nut-butter however it provides some of insight. If most of it is true, then it helps to explain the current state of economic affairs.

http://ampedstatus.com/is-it-time-for-law-abiding-american-citizens-to-stop-paying-their-taxes-and-start-a-new-government

I honestly can’t picture some secret behind-the-scenes economic master plan being drawn up by some powerful wealthy elite club, but maybe I’m just naive.

Don’t be mad over what other people are doing. If you can afford a home in Irvine, then buy one if you plan on living in it and “planting roots”. If you can’t afford it, then Corona has nice houses too. Live within your means and you’ll be fine. Remember, don’t use your primary house as an investment, just make sure you can afford it and be happy in it. Life is too short to have more concern than that for you primary residence. If you’re looking for investment property, then Irvine and any other “premium” location is not for you.

If Irvine commands too much of a price premium, you could consider buying in Signal Hill!!!

2/2 1200 square foot condo built in 1983 for $379K. If I’m not mistaken, there was an Irvine condo featured here recently for much less than that. I don’t know about you, but I’d take Irvine over Signal Hill.

Moral of the story: Don’t blindly assume that Irvine is wildly overpriced and everything else around it is affordable and at rental parity.

Your write The reason lenders are allowing widespread squatting are twofold, actually it is threefold as you and others have writen is FASB 157 which allows lenders to mark their inventory to fantasy rather than to market.

Soon there is coming a liquidity evaporation in the stock market and bond market places; this will result in economic shock and awe; that is economic dislocation; reducing those willing to pay 4,5,6,7, and 8 times the prevailing household income level. But most of all the Treasury simply is simply going to stop funding the GSEs. Then the oligarchs will lease homes and evict the squatters.